GBP/USD clings to gains above mid-1.2600s post-UK jobs report
- The British pound remained well supported by the latest Brexit optimism.
- Mixed UK monthly employment details did little to provide any impetus.
- The USD remained supportive of the bid tone surrounding the GBP/USD.
- The focus shifts to US macro data and the Fed Chair Powell’s testimony.
The GBP/USD pair maintained its strong bid tone above mid-1.2600s, with bulls still awaiting a move beyond the very important 200-day SMA post-UK macro data.
The British pound remained well supported by easing concerns about a no-deal Brexit, especially after the UK and the European Union agreed to intensify post-Brexit talks. The UK Prime Minister Boris Johnson added to the optimism and said that an outline of a deal could be reached by the end of July.
The already stronger sterling got an additional boost following the release of the latest UK monthly employment details, which showed that the unemployment rate held steady at 3.9% during the three months to April. The reading was much better than consensus estimates pointing to rise to 4.5%.
The positive reading, to some extent, was negated by a smaller-than-expected drop in the number of people claiming unemployment-related benefits. In fact, the Claimant Count Change came in at 528.9K as against 370K expected and the previous month's reading was also revised higher to 1032.7K
On the other hand, the US dollar remained depressed amid the upbeat market mood, supported by the Fed's announcement that it will start buying investment-grade corporate bonds. The move helped offset concerns about a second wave of the coronavirus infections and boosted the global risk sentiment.
Later during the early North American session, the US economic docket – highlighting the release of monthly retail sales – will be looked upon for some impetus. Apart from this, the Fed Chair Jerome Powell's testimony will influence the USD price dynamics and produce some trading opportunities.
Technical levels to watch